Impact of attacks on Saudi economy limited for now: IMF

By the Editorial Team · Sunday, October 25, 2026

The International Monetary Fund reports that despite recent Houthi attacks on Saudi infrastructure and ongoing regional tensions, the immediate economic impact on Saudi Arabia has been limited due to strong domestic demand and public sector resilience. However, the broader Gulf economy is expected to contract in 2026 amid declining hydrocarbon output and geopolitical risks, with a potential rebound contingent on improved stability and diplomatic progress.

Economic fallout from recent Houthi attacks on Saudi Arabia has so far been limited, according to the International Monetary Fund (IMF), despite ongoing geopolitical tensions in the Gulf region. The Yemeni Houthi group has intensified strikes on Saudi targets in recent weeks, including oil facilities and airports. While these actions have introduced challenges, Saudi Arabia’s robust domestic demand and strong public sector have helped cushion the immediate economic impact.

Jihad Azour, the IMF's regional director, indicated that although conflicts have affected crude shipments due to Iran’s blockade of the Strait of Hormuz and the Houthi maritime blockade, oil exports continue to flow. Saudi Arabia remains the world’s largest oil exporter, and its economy is projected to contract by 3.3 percent this year. This downturn is attributed in part to the broader conflict that erupted in February between Iran and a US-Israel coalition.

A regional IMF report released on Thursday highlighted that all Gulf Cooperation Council (GCC) states except Oman have experienced declines in hydrocarbon production. The Gulf economy overall is expected to shrink by 4.8 percent in 2026. Nevertheless, the IMF forecasts a significant rebound next year, with anticipated growth of approximately 9.1 percent. This outlook, however, is tempered by persistent uncertainty stemming from stalled diplomatic efforts between Washington and Tehran and escalating military threats.

On the same day as the report’s release, Iran’s Revolutionary Guards issued warnings of potential conflict escalation should the US military continue escorting vessels through the Strait of Hormuz. Concurrently, media reports from the United States and Israel suggest possible preparations for further strikes against Iran, possibly following the US midterm elections scheduled for November 3. Azour cautioned that any renewal or intensification of hostilities resulting in infrastructure damage would increase economic costs substantially.

Azour emphasized that IMF projections assume relatively stable oil prices—higher than pre-conflict levels but substantially lower than if regional violence were to intensify. He noted the kingdom’s future ability to attract investment and talent will depend heavily on restoring stability. While the economic ramifications of the conflict are expected to persist for several years, Azour affirmed that the underlying fundamentals of Saudi Arabia’s economy remain strong.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.